UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x]Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
[ ]Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 26, 1999
Commission File Number 33-2253
MORTGAGE SECURITIES III TRUSTS A, B, C, D, E AND F
Delaware Trusts (IRS Employer Identification
No. 91-1314537)
Wilmington, DE 19890
Telephone (302) 651-1730
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by a check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports); and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
The Registrant meets the conditions set forth in General
Instruction I(1)(a) and (b) of Form 10-K and is therefore, filing
this form with the reduced disclosure format.
<PAGE>
Mortgage Securities III Trusts A, B, C, D, E and F
Table of Contents
Page No.
PART I
Item 1. Business..................................................1
Item 2. Properties................................................1
Item 3. Legal Proceedings.........................................1
Item 4. Submission of Matters to a Vote of Security Holders.......1
PART II
Item 5. Market for the Registrant's Beneficial Interest
and Related Security Holder Matters...................2
Item 6. Selected Financial Data.................................2
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................2
Item 8. Financial Statements and Supplementary Data.............3
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures..................3
PART III
Item 10. Directors and Executive Officers of the Registrant......3
Item 11. Executive Compensation..................................3
Item 12. Security Ownership of Certain Beneficial
Owners and Management.................................3
Item 13. Certain Relationships and Related Transactions..........3
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K...................................4
SIGNATURE ........................................................6
Report of Independent Public Accountants...............................7
Statements of Operations for the Three Years Ended December 26, 1999
Trust A 9
Trust B 10
Trust C 11
Trust D 12
Trust E 13
Trust F 14
Balance Sheets as of December 26, 1999 and December 27, 1998
Trust A 15
Trust B 16
Trust C 17
Trust D 18
Trust E 19
Trust F 20
<PAGE>
[CAPTION]
Mortgage Securities III Trusts A, B, C, D, E and F
Table of Contents
Page No.
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 26, 1999
Trust A 21
Trust B 22
Trust C 23
Trust D 24
Trust E 25
Trust F 26
Statements of Cash Flows for the Three Years Ended December 26, 1999
Trust A 27
Trust B 28
Trust C 29
Trust D 30
Trust E 31
Trust F 32
Notes to Financial Statements for the Three Years Ended
December 26, 1999............................................33
Schedule XIII-Other Security Investments
Trust B 39
Trust D 40
Trust E 41
INDEX TO EXHIBITS..............................................42
<PAGE>
PART I
Item 1. Business
Mortgage Securities III Trusts A, B, C, D, E and F (the
"Trusts") were established under the laws of Delaware by a
trust agreement. Prior to December 27, 1987, the trust
agreement was among Mortgage Securities III Corporation,
Weyerhaeuser Real Estate Company and Wilmington Trust
Company. On December 27, 1987, Weyerhaeuser Real Estate
Company dividended its beneficial interests in Mortgage
Securities III Trusts A, B, C, D, E and F to Weyerhaeuser
Company which in turn contributed its beneficial interests
in the Trusts to Weyerhaeuser Financial Services, Inc., a
wholly-owned subsidiary of Weyerhaeuser Company. The
Trusts were organized to, and are engaged to raise funds
through the issuance and sale of Collateralized Mortgage
Obligation bonds collateralized by Government National
Mortgage Association (GNMA) and Federal National Mortgage
Association (FNMA) certificates. The Trusts A, B, C, D, E
and F were established on April 8, 1986 and commenced
business on June 30, 1986, September 30, 1986, December
30, 1986, February 27, 1987, December 22, 1987 and March
30, 1988, respectively.
Each Trust issued a series of Collateralized Mortgage
Obligations (the "Bonds"). Trust A, B, C, D and F's Bonds
are collateralized by GNMA and FNMA certificates and Trust
E's Bonds are collateralized by GNMA certificates.
<TABLE>
<CAPTION>
Trust Date Issued Bonds Issued
<S> <C> <C>
A June 30, 1986 $100,000,000
B September 30, 1986 $100,000,000
C December 30, 1986 $100,000,000
D February 27, 1987 $ 75,600,000
E December 22, 1987 $131,600,000
F March 30, 1988 $129,250,000
</TABLE>
Item 2. Properties
The Trusts A, B, C, D, E and F have no physical properties.
Item 3. Legal Proceedings
The Trusts A, B, C, D, E and F are not a party to any
material pending proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Omitted pursuant to General Instruction J(2)(c) of Form 10-K.
-1-
<PAGE>
PART II
Item 5. Market for the Registrant's Beneficial Interest and
Related Security Holder Matters
As of March 20, 2000, the Trusts' beneficial interest is
owned by Mortgage Securities III Corporation and is not
traded on any stock exchange or on the over-the-counter
market.
Item 6. Selected Financial Data
Omitted pursuant to General Instruction I(2)(a) of Form 10-K.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Business activity during 1999, 1998 and 1997 consisted of
the collection of principal and interest by the trustee on
the GNMA and FNMA certificates and the disbursement of the
required payment of interest and principal to the
bondholders.
The following table outlines principal payments made by
the Trusts during 1999 to the bondholders (in thousands).
<TABLE>
<CAPTION>
Class 3 Class 4 Total
<S> <C> <C> <C>
Trust A $ - $ - $ -
Trust B - 3,435 3,435
Trust C - - -
Trust D 2,776 - 2,776
Trust E - 10,310 10,310
Trust F - - -
</TABLE>
This rate of payment is sufficient to retire the Bonds
prior to their stated maturity.
The Trusts, like all other companies using computers and
microprocessors, was faced with the task of addressing the
Year 2000 problem. The business activities of the Trusts,
which consists of the collection of principal and interest
on the GNMA and FNMA certificates securing the bonds
issued by the Trusts and disbursing the required payment
of principal and interest to the bondholders, are
conducted by third party suppliers to the Trusts. Certain
accounting, administrative and clerical services are
provided to the Trusts by an affiliate. Consequently, the
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<PAGE>
Trusts did not incur and any expenses for Year 2000
remediation. During the transition to the year 2000, the
Trusts did not experience problems that affected
operations.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Trusts, together with the
related Notes to Financial Statements and Report of
Independent Public Accountants, for the three years ended
December 26, 1999, are included herein.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures
There was no change in accountants, nor any material
disagreement with accountants on any matter of accounting
principles, practices or financial statement disclosures,
during the year ended December 26, 1999.
PART III
Item 10. Directors and Executive Officers of the Registrant
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 11. Executive Compensation
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 13. Certain Relationships and Related Transactions
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
-3-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(1) The following documents are filed as part of this report:
(a) Report of Independent Public Accountants.
(b) Financial Statements:
Statements of Operations
Trust A for the Three Years Ended December 26, 1999
Trust B for the Three Years Ended December 26, 1999
Trust C for the Three Years Ended December 26, 1999
Trust D for the Three Years Ended December 26, 1999
Trust E for the Three Years Ended December 26, 1999
Trust F for the Three Years Ended December 26, 1999
Balance Sheets
Trust A as of December 26, 1999 and December 27, 1998
Trust B as of December 26, 1999 and December 27, 1998
Trust C as of December 26, 1999 and December 27, 1998
Trust D as of December 26, 1999 and December 27, 1998
Trust E as of December 26, 1999 and December 27, 1998
Trust F as of December 26, 1999 and December 27, 1998
Statements of Changes in Owner's Beneficial Interest
Trust A for the Three Years Ended December 26, 1999
Trust B for the Three Years Ended December 26, 1999
Trust C for the Three Years Ended December 26, 1999
Trust D for the Three Years Ended December 26, 1999
Trust E for the Three Years Ended December 26, 1999
Trust F for the Three Years Ended December 26, 1999
Statements of Cash Flows
Trust A for the Three Years Ended December 26, 1999
Trust B for the Three Years Ended December 26, 1999
Trust C for the Three Years Ended December 26, 1999
Trust D for the Three Years Ended December 26, 1999
Trust E for the Three Years Ended December 26, 1999
Trust F for the Three Years Ended December 26, 1999
Notes to Financial Statements for the Three Years
Ended December 26, 1999.
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<PAGE>
(c) Financial Statement Schedules:
Schedule XIII - Other Security Investments Trust B
Schedule XIII - Other Security Investments Trust D
Schedule XIII - Other Security Investments Trust E
(d) Exhibits:
Certificate of Incorporation of Mortgage Securities
III Corporation (incorporated by reference to Exhibit
3(a) to Registration Statement on Form S-11 dated
December 18, 1985).
Bylaws of Mortgage Securities III Corporation
(incorporated by reference to Exhibit 3(b) to
Registration Statement on Form S-11 dated December 18,
1985).
Form of Indenture dated June 1, 1986 between the Trust
and Texas Commerce Bank National Association, as
Trustee, relating to GNMA and
FNMA Collateralized Mortgage Obligations (incorporated
by reference to Exhibit 4(a) to Registration Statement
on Form S-11 dated December 18, 1985).
Form of Supplemental
Indenture dated as of June 1, 1986 (incorporated by
reference to Exhibit 4(a) to Registration Statement on
Form S-11 dated July 11, 1986).
(2) Exhibits are included in Item (1)(d) above.
(3) Financial Statement Schedules required by Regulation S-X
are included in Item (1)(c) above.
-5-
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 20th day of
March 2000.
MORTGAGE SECURITIES III TRUSTS
A, B, C, D, E AND F
Trusts acting through Wilmington
Trust Company, not in its individual
capacity, but solely as Owner Trustee
By: ____________________________
Denise M. Geran
Senior Financial Services Officer
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<PAGE>
Report of Independent Public Accountants
To the Beneficial Owner of Mortgage
Securities III Trusts A, B, C, D, E and F
We have audited the accompanying balance sheets of Mortgage
Securities III Trusts A, B, C, D, E and F (trusts established under
the laws of the State of Delaware) as of December 26, 1999 and
December 27, 1998, and the related statements of operations,
changes in owner's beneficial interest and cash flows for each of
the three years in the period ended December 26, 1999. These
financial statements and the schedules referred to below are the
responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and schedules
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Mortgage Securities III Trusts A, B, C, D, E and F, as of December
26, 1999 and December 27, 1998, and the results of their operations
and their cash flows for each of the three years in the period
ended December 26, 1999 in conformity with generally accepted
accounting principles.
-7-
<PAGE>
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed
in the index to financial statements are presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required
to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Seattle, Washington
February 9, 2000
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<PAGE>
<TABLE>
Mortgage Securities III Trust A
Statements of Operations
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Interest income $ - $ - $ 676
Interest expense - - 594
Other income - - 425
--------- --------- ---------
- - -
Net income $ - $ - $ 507
========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust B
Statements of Operations
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 855 $ 1,136 $ 1,573
Interest expense 727 1,118 1,481
--------- --------- ---------
Net income $ 128 $ 18 $ 92
========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust C
Statements of Operations
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ - $ 742 $ 1,312
Interest expense - 742 1,426
Gain on sale - 272 -
--------- --------- ---------
Net income (loss) $ - $ 272 $ (114)
========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust D
Statements of Operations
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 695 $ 983 $ 1,145
Interest expense 698 1,058 1,198
--------- --------- ---------
Net loss $ (3) $ (75) $ (53)
========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust E
Statements of Operations
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
-------- ---------- --------
<S> <C> <C> <C>
Interest income $ 2,279 $ 3,106 $ 3,994
Interest expense 2,685 3,597 4,716
Interest expense to affiliate - - 696
--------- ---------- ---------
Net loss $ (406) $ (491) $ (1,418)
========= ========== =========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust F
Statements of Operations
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Interest income $ - $ - $ 822
Interest expense - - 917
Interest expense to affiliate - - 180
Other income - - 450
--------- --------- ---------
Net income $ - $ - $ 175
========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust A
Balance Sheets
December 26, 1999 and December 27, 1998
(Dollar amounts in thousands)
<CAPTION>
1999 1998
<S> <C> <C>
TOTAL ASSETS - TRUST A $ - $ -
======== ========
TOTAL OWNER'S BENEFICIAL INTEREST - TRUST A $ - $ -
======== ========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust B
Balance Sheets
December 26, 1999 and December 27, 1998
(Dollar amounts in thousands)
<CAPTION>
1999 1998
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account 584 858
585 859
Interest receivable 59 82
Government National and Federal National
Mortgage Association Certificates 8,186 11,298
-------- --------
TOTAL ASSETS - TRUST B $ 8,830 $12,239
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 199 $ 301
Collateralized Mortgage Obligation bonds,
net 6,749 10,184
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 1,881 1,753
Total Owner's Beneficial Interest 1,882 1,754
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST B $ 8,830 $12,239
======== ========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust C
Balance Sheets
December 26, 1999 and December 27, 1998
(Dollar amounts in thousands)
<CAPTION>
1999 1998
<S> <C> <C>
Assets
Receivable from beneficial owner $ - $ 972
TOTAL ASSETS - TRUST C $ - $ 972
======== ========
Owner's Beneficial Interest
Owner's Beneficial Interest:
Owner's beneficial interest $ - $ 1
Retained earnings - 971
Total Owner's Beneficial Interest - 972
TOTAL OWNER'S BENEFICIAL INTEREST - TRUST C $ - $ 972
======== ========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust D
Balance Sheets
December 26, 1999 and December 27, 1998
(Dollar amounts in thousands)
<CAPTION>
1999 1998
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account 104 212
105 213
Receivable from beneficial owner 143 95
Interest receivable 40 70
Government National and Federal National
Mortgage Association Certificates 7,126 9,855
TOTAL ASSETS - TRUST D $ 7,414 $10,233
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 101 $ 141
Collateralized Mortgage Obligation bonds,
net 7,041 9,817
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 271 274
Total Owner's Beneficial Interest 272 275
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST D $7,414 $10,233
======== ========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust E
Balance Sheets
December 26, 1999 and December 27, 1998
(Dollar amounts in thousands)
<CAPTION>
1999 1998
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account 1,516 3,328
1,517 3,329
Interest receivable 164 222
Government National Mortgage Association
Certificates 24,899 33,430
TOTAL ASSETS - TRUST E $26,580 $36,981
Liabilities and Owner's Beneficial Interest
Interest payable $ 456 $ 687
Collateralized Mortgage Obligation bonds,
net 19,033 28,797
Owner's Beneficial Interest:
Owner's beneficial interest 36,294 36,294
Accumulated deficit (29,203) (28,797)
Total Owner's Beneficial Interest 7,091 7,497
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - $26,580 $36,981
TRUST E
========= ========
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust F
Balance Sheets
December 26, 1999 and December 27, 1998
(Dollar amounts in thousands)
<CAPTION>
1999 1998
<S> <C> <C>
TOTAL ASSETS - TRUST F $ - $ -
TOTAL OWNER'S BENEFICIAL INTEREST - TRUST F $ - $ -
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust A
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Owner's Retained
Beneficial Earnings Total
Interest
<S> <C> <C> <C>
Balance at December 29, 1996 $ 1 $ 757 $ 758
Net income - 507 507
Balance at December 28, 1997 1 1,264 1,265
Dividends paid - (1,264) (1,264)
Return of owner's beneficial (1) - (1)
interest
Balance at December 27, 1998 - - -
Balance at December 26, 1999 $ - $ - $ -
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust B
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Owner's Retained
Beneficial Earnings Total
Interest
<S> <C> <C> <C>
Balance at December 29, 1996 $ 1 $ 1,643 $1,644
Net income - 92 92
Balance at December 28, 1997 1 1,735 1,736
Net income - 18 18
Balance at December 27, 1998 1 1,753 1,754
Net income - 128 128
Balance at December 26, 1999 $ 1 $ 1,881 $1,882
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust C
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Owner's Retained
Beneficial Earnings Total
Interest
<S> <C> <C> <C>
Balance at December 29, 1996 $ 1 $ 813 $ 814
Net loss - (114) (114)
Balance at December 28, 1997 1 699 700
Net income - 272 272
Balance at December 27, 1998 1 971 972
Dividends paid - (971) (971)
Return of owner's beneficial (1) - (1)
interest
Balance at December 26, 1999 $ - $ - $ -
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust D
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Owner's Retained
Beneficial Earnings Total
Interest
<S> <C> <C> <C>
Balance at December 29, 1996 $ 1 $ 472 $ 473
Dividends paid - (70) (70)
Net loss - (53) (53)
Balance at December 28, 1997 1 349 350
Net loss - (75) (75)
Balance at December 27, 1998 1 274 275
Net loss - (3) (3)
Balance at December 26, 1999 $ 1 $ 271 $ 272
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust E
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Owner's Accumulated
Beneficial Deficit Total
Interest
<S> <C> <C> <C>
Balance at December 29, 1996 $ 1 $(26,888) $(26,887)
Contribution 36,293 - 36,293
Net loss - (1,418) (1,418)
Balance at December 28, 1997 36,294 (28,306) 7,988
Net loss - (491) (491)
Balance at December 27, 1998 36,294 (28,797) 7,497
Net loss - (406) (406)
Balance at December 26, 1999 $ 36,294 $(29,203) $ 7,091
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust F
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Owner's Accumulated
Beneficial Deficit Total
Interest
<S> <C> <C> <C>
Balance at December 29, 1996 $ 1 $ (6,716) $(6,715)
Contribution 9,374 - 9,374
Net income - 175 175
Balance at December 28, 1997 9,375 (6,541) 2,834
Return of owner's beneficial (9,375) 6,541 (2,834)
interest
Balance at December 27, 1998 - - -
Balance at December 26, 1999 $ - $ - $ -
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust A
Statements of Cash Flows
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operations:
Net income $ - $ - $ 507
Non-cash charges to income:
Amortization - - 3
Write-offs - - 81
Changes in:
Interest receivable - - 85
Receivable from beneficial owner - 1,263 (1,263)
Interest payable - - (305)
Cash flows from operations - 1,263 (892)
Cash flows from investing
activities:
Collections on mortgage backed
certificates - - 10,192
Cash flows from financing
activities:
Return of owner's beneficial - (1) -
interest
Dividends paid - (1,264) -
Payments on collateralized
mortgage obligation bonds. - - (10,068)
Cash flows from financing activities - (1,265) (10,068)
Net decrease in cash and equivalents - (2) (768)
Cash and equivalents at beginning
of year - 2 770
Cash and equivalents at end of year $ - $ - $ 2
Supplemental disclosure:
Cash paid during the year for
interest $ - $ - $ 850
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust B
Statements of Cash Flows
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operations:
Net income $ 128 $ 18 $ 92
Non-cash charges to income:
Amortization - - 3
Write-offs - - 99
Accretion of interest - - 334
Changes in:
Interest receivable 23 23 31
Interest payable (102) (1) (170)
Cash flows from operations 49 40 389
Cash flows from investing
activities:
Collections on mortgage backed
certificates 3,112 3,373 2,178
Cash flows from financing
activities:
Payments on collateralized
mortgage obligation bonds (3,435) (3,254) (2,765)
Net increase (decrease) in cash and
equivalents (274) 159 (198)
Cash and equivalents at beginning
of year 859 700 898
Cash and equivalents at end of year $ 585 $ 859 $ 700
Supplemental disclosure:
Cash paid during the year for
interest $ 829 $ 1,119 $ 1,353
</TABLE>
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<PAGE>
<TABLE>
Mortgage Securities III Trust C
Statements of Cash Flows
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operations:
Net income (loss) $ - $ 272 $ (114)
Non cash charges:
Amortization - - 13
Write-offs - - 202
Gain on sale - (272) -
Changes in:
Interest receivable - 87 21
Receivable from beneficial owner 972 (972) -
Interest payable - (274) (152)
Cash flows from operations - (1,159) (30)
Cash flows from investing activities
Collections on mortgage backed
certificates - 12,510 2,098
Cash flows from financing
activities:
Return of owner's beneficial (1) - -
interest
Dividends paid (971) - -
Payments on collateralized
mortgage obligation bonds - (12,241) (2,079)
Cash flows from financing activities (972) (12,241) (2,079)
Net decrease in cash and equivalents - (890) (11)
Cash and equivalents at beginning
of year - 890 901
Cash and equivalents at end of year $ - $ - $ 890
Supplemental disclosure:
Cash paid during the year for
interest $ - $ 1,016 $ 1,207
</TABLE>
-29-
<PAGE>
<TABLE>
Mortgage Securities III Trust D
Statements of Cash Flows
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operations:
Net loss $ (3) $ (75) $ (53)
Non-cash charges:
Amortization - - 7
Write-offs - - 154
Changes in:
Interest receivable 30 18 19
Receivable from beneficial owner (48) (67) 17
Interest payable (40) 51 (123)
Cash flows from operations (61) (73) 21
Cash flows from investing
activities:
Collections on mortgage backed
certificates 2,729 2,842 2,338
Cash flows from financing
activities:
Dividends paid - - (70)
Payments on collateralized
mortgage obligation bonds (2,776) (2,677) (2,408)
Cash flows from financing activities (2,776) (2,677) (2,478)
Net (decrease) increase in cash
and equivalents (108) 92 (119)
Cash and equivalents at beginning
of year 213 121 240
Cash and equivalents at end of year $ 105 $ 213 $ 121
Supplemental disclosure:
Cash paid during the year for
interest $ 738 $ 1,007 $ 1,220
</TABLE>
-30-
<PAGE>
<TABLE>
Mortgage Securities III Trust E
Statements of Cash Flows
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operations:
Net loss $ (406) $ (491) $(1,418)
Non-cash charges:
Amortization 546 544 758
Write-offs - - (17)
Accretion of interest - - 925
Changes in:
Interest receivable 58 59 55
Interest payable (231) (171) (128)
Interest payable to
Weyerhaeuser Mortgage Company - - (18,656)
Cash flows from operations (33) (59) (18,481)
Cash flows from investing
activities:
Collections on mortgage backed
certificates 8,531 8,641 5,904
Cash flows from financing
activities:
Contribution - - 36,293
Payments on collateralized
mortgage obligation bonds (10,310) (7,566) (6,583)
Payments to Weyerhaeuser
Mortgage - - (16,941)
Company
Cash flows from financing (10,310) (7,566) 12,769
activities:
Net increase (decrease) in cash
and equivalents 1,812 1,016 192
Cash and equivalents at beginning
of year 3,329 2,313 2,121
Cash and equivalents at end of year $ 1,517 $ 3,329 $ 2,313
Supplemental disclosure:
Cash paid during the year for
interest $ 2,370 $ 3,224 $23,118
</TABLE>
-31-
<PAGE>
<TABLE>
Mortgage Securities III Trust F
Statements of Cash Flows
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operations:
Net income (loss) $ - $ - $ 175
Non-cash charges to income:
Amortization - - 71
Write-offs - - 260
Accretion of interest - - 415
Changes in:
Interest receivable - - 90
Interest payable - - (304)
Receivable from beneficial - 2,832 (2,832)
owner
Interest payable to
Weyeraheuser
Mortgage Company - - (8,570)
Cash flows from operations - 2,832 (10,695)
Cash flows from investing
activities:
Sale of/collections on mortgage
backed
certificates - - 11,974
Cash flows from financing
activities:
Contribution - - 9,374
Return of owner's beneficial - (2,834) -
interest
Payments on Weyerhaeuser
Mortgage - - (624)
Company note
Payments on collateralized
mortgage obligation bonds - - (10,676)
Cash flows from financing - (2,834) (1,926)
activities
Net decrease in cash and - (2) (647)
equivalents
Cash and equivalents at beginning
of year - 2 649
Cash and equivalents at end of $ - $ - $ 2
year
Supplemental disclosure:
Cash paid during the year for
interest $ - $ - $9,616
</TABLE>
-32-
<PAGE>
Mortgage Securities III Trusts A, B, C, D, E and F
Notes to Financial Statements
For the Three Years Ended December 26, 1999
(Dollar amounts in thousands)
Note 1. Description of business:
Mortgage Securities III Trusts A, B, C, D, E and F (the
"Trusts") were established under the laws of Delaware by a
trust agreement. Prior to December 27, 1987, the trust
agreement was among Mortgage Securities III Corporation,
Weyerhaeuser Real Estate Company and Wilmington Trust
Company. On December 27, 1987, Weyerhaeuser Real Estate
Company dividended its beneficial interests in Mortgage
Securities III Trusts A, B, C, D, E and F to Weyerhaeuser
Company which in turn contributed its beneficial interests
in the Trusts to Weyerhaeuser Financial Services, Inc., a
wholly-owned subsidiary of Weyerhaeuser Company. The
Trusts were organized to, and are engaged to raise funds
through the issuance and sale of Collateralized Mortgage
Obligation bonds collateralized by Government National
Mortgage Association (GNMA) and Federal National Mortgage
Association (FNMA) certificates. The Trusts A, B, C, D, E
and F were established on April 8, 1986 and commenced
business on June 30, 1986, September 30, 1986, December
30, 1986, February 27, 1987, December 22, 1987 and March
30, 1988, respectively.
Each Trust issued a series of Collateralized Mortgage
Obligations (the "Bonds"). Trust B and D's Bonds are
collateralized by GNMA and FNMA certificates and Trust E's
Bonds are collateralized by GNMA certificates. Trust A, C
and F had no remaining Bonds or related collateralization
at December 26, 1999.
-33-
<PAGE>
<TABLE>
Bonds originally issued were as follows:
<CAPTION>
Trust Date Issued Bonds Issued
<S> <C> <C>
A June 30, 1986 $100,000
B September 30, 1986 $100,000
C December 30, 1986 $100,000
D February 27, 1987 $ 75,600
E December 22, 1987 $131,600
F March 30, 1988 $129,250
</TABLE>
Activity during 1999, 1998 and 1997, primarily consisted
of the collection of principal and interest on the GNMA
and FNMA certificates and disbursement of the required
payments of principal and interest to the bondholders. In
1998, the Bonds in Trust C were called and in 1997, the
Bonds in Trusts A and F were called. All GNMA and FNMA
certificates of these Trusts were sold and all Bond
principal and interest were paid to the bondholders when
the Bonds were called.
Note 2. Accounting policies:
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The bond discounts on Trusts B and D were written off in
1997 as management intends to prepay the bonds at the
earliest allowable prepayment date and the amounts were no
longer material. The bond discount for Trust E is
amortized on a straight line basis, which approximates the
effective interest method, over the remaining life of the
instruments.
Cash and equivalents include cash held in the collection
accounts and invested in short term investments with
maturities at date of purchase of less than three months.
The cost and estimated market values of investments in
debt securities are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Market
Held to Maturity: Cost Gains Value Losses
<S> <C> <C> <C> <C>
Mortgage-backed
Securities
Trust B 8,186 111 - 8,297
Trust D 7,126 38 - 7,164
Trust E 24,899 - (290) 24,609
</TABLE>
The Trusts are legally precluded from selling the
investments in debt securities, except in the case of a
call of the Collateralized Mortgage Obligation bonds as
discussed in Note 3.
Note 3.Collateralized Mortgage Obligation Bonds:
<TABLE>
Collateralized Mortgage Obligation Bonds at December 26,
1999 and December 27, 1998 consist of the following:
<CAPTION>
1999 1998
<S> <C> <C>
Trust B:
Class 4 - 9.00%, stated maturity
October 1, 2016 $ 6,749 $ 10,184
Trust D:
Class 3 - 8.60%, stated maturity
March 1, 2017 $ 7,041 $ 9,817
Trust E:
Class 4 - 9.00%, stated maturity
January 1, 2018 $ 20,264 $ 30,574
Unamortized discount (1,231) (1,777)
$ 19,033 $ 28,797
</TABLE>
-34-
<PAGE>
The stated maturity is the date such class will be fully
paid, assuming that scheduled interest and principal
payments (with no prepayments) on the certificates are
timely received.
All collections on the certificates pledged as security for
the Bonds will be remitted directly to a collection account
(the "Collection Account") established with the Trustee and
together with the reinvestment earnings thereon, will be
available for application to the payment of principal and
interest on the bonds on the following payment date.
Each Trust's Bonds are subject to a special redemption, in
whole or in part, if, as a result of substantial payments
of principal on the underlying mortgage loans and/or low
reinvestment yields, the Trusts determine that the amount
of cash anticipated to be on deposit in the Collection
Accounts on the next payment date might be insufficient to
make required payments on the Bonds. Any such redemption
would not exceed the principal amount of Bonds that would
otherwise be required to be paid on the next payment date.
As a result, a special redemption of Bonds will not result
in a payment to bondholders more than two months earlier
than the payment date on which such payment would otherwise
have been received. The Bonds are not otherwise subject to
call at the option of the Trusts except that (a) Trust B
and E's Class 4 Bonds may be redeemed in whole, but not in
part, at the Trusts' option on any payment date on or after
October 1, 2001 and January 1, 2003, respectively, (or on
any earlier payment date if the current principal amount of
Trust B and E's Class 4 Bonds are less than $6,100 and
$13,160, respectively) and (b) Trust D's Class 3 Bonds may
be redeemed in whole, but not in part, at the Trust's
option on any payment date on or after March 1, 2002, or on
any earlier payment date if the aggregate outstanding
principal amount of the Class 3 Bonds is less than 10
percent of the aggregate initial principal amount of
$75,600.
Any such redemptions at the option of the Trusts shall be
at a price equal to 100 percent of the unpaid principal
amount of such Bonds plus accrued interest.
The maturities of the Collateralized Mortgage Obligation
Bonds are based on the prepayment speed (liquidations) on
the GNMA and FNMA certificates collateralizing the Bonds
and the reinvestment of scheduled distributions at the
assumed reinvestment rates. Maturities for the succeeding
five years with estimated liquidations based on current
market interest rates are as follows:
<TABLE>
<CAPTION>
Trust Trust Trust
B D E
<S> <C> <C> <C>
2000 1,322 1,024 3,833
2001 1,179 896 3,429
2002 1,051 759 3,075
2003 954 661 2,770
2004 870 578 2,522
</TABLE>
Note 4. Assets pledged:
Trust B and D's Bonds are collateralized by the Trusts' GNMA
and FNMA certificates and the Collection Accounts. Trust
E's Bonds are collateralized by Trust E's GNMA certificates
and the Collection Account (see Note 3). Collections on the
certificates are used to meet the quarterly Bond interest
payments and to reduce the outstanding principal balance on
the Bonds. As of December 26, 1999, certificates are
guaranteed by the Government National Mortgage Association
and the Federal National Mortgage Association as follows:
<TABLE>
<CAPTION>
Government National Federal National
Mortgage Association Mortgage Association
<S> <C> <C>
Trust B 7,274 912
Trust D 6,225 901
Trust E 24,899 N/A
</TABLE>
-35-
<PAGE>
Note 5. Related parties:
Trusts A, B, C and D purchased from an affiliate,
Weyerhaeuser Mortgage Company, GNMA and FNMA certificates
which were used to collateralize the Bonds. The purchases
were at par value, plus Trust A and D's purchase premiums
and less Trust B and C's purchase discounts. The purchases
were financed with market-rate short-term debt from this
affiliate until proceeds from the bond issuance were
obtained.
Trust E purchased from an affiliate, Weyerhaeuser Mortgage
Company, GNMA certificates which were used to collateralize
the Bonds. Trust F purchased from an affiliate,
Weyerhaeuser Mortgage Company, GNMA and FNMA certificates
which were used to collateralize the Bonds. The purchases
were at par value, less the purchase discounts. The
purchases were financed with the proceeds received from the
Bond issuances and notes due to Weyerhaeuser Mortgage
Company. The notes accrued interest at Bank of America's
prime rate and compounded interest annually. Both the
principal and interest related to the Weyerhaeuser Mortgage
Company payables were paid off by Weyerhaeuser Financial
Services, Inc. (Beneficial Owner) in March 1997, in
anticipation of the sale of Weyerhaeuser Mortgage Company to
an unrelated third party by Weyerhaeuser Financial Services,
Inc. and Weyerhaeuser Company. In August 1997, Weyerhaeuser
Financial Services, Inc. contributed capital to Trusts E and
F, increasing beneficial owner's interest.
The Beneficial Owner advanced funds to Trust C during the
third quarter of 1998. The funds were repaid during the
fourth quarter of 1998. No interest was charged as the
advances were treated as a current payable.
Certain ongoing administrative and accounting functions are
provided by the Beneficial Owner at no cost to each Trust.
-36-
<PAGE>
Note 6. Results of operations:
All results of operations will be transferred to the
Beneficial Owner of the Trusts. Mortgage Securities III
Corporation will be responsible for all tax liabilities
incurred relating to the Trusts' operations.
-37-
<PAGE>
<TABLE>
Mortgage Securities III Trust B
Schedule XIII - Other Security Investments
December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Number of
Certificates Market
Type of Security Held Cost Value
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 31 $ 7,274 $ 7,376
Federal National
Mortgage Association
Certificates 21 912 921
52 $ 8,186 $ 8,297
<FN>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-38-
<PAGE>
<TABLE>
Mortgage Securities III Trust D
Schedule XIII - Other Security Investments
December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Number of
Certificates Market
Type of Security Held Cost Value
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 23 $ 6,225 $ 6,243
Federal National
Mortgage Association
Certificates 10 901 921
33 $ 7,126 $ 7,164
<FN>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-39-
<PAGE>
<TABLE>
Mortgage Securities III Trust E
Schedule XIII - Other Security Investments
December 26, 1999
(Dollar amounts in thousands)
<CAPTION>
Number of
Certificates Market
Type of Security Held Cost Value
<S> <C> <C> <C>
Government National
Mortgage
Association
Certificates 67 $24,899 $24,609
<FN>
<F1>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-40-
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits Page
3(a) Certificate of Incorporation of the Mortgage
Securities III Corporation (incorporated by
reference to Exhibit 3(a) to Registration
Statement on Form S-11 dated December 18, 1985). *
3(b) Bylaws of Mortgage Securities III Corporation
(incorporated by reference to Exhibit 3(b) to
Registration Statement on Form S-11 dated
December 18, 1985). *
4(a) Form of Indenture dated June 1, 1986 between
the Trust and Texas Commerce Bank National
Association, as trustee, relating to GNMA and
FNMA Collateralized Mortgage Obligations
(incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11 dated
December 18, 1985). *
4(a) Form of Supplemental Indenture dated as of
June 1, 1986 (incorporated by reference to
Exhibit 4(a) to Registration Statement on
Form S-11 dated July 11, 1986). *
*Incorporated by reference.
-41-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> CT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-END> DEC-26-1999
<TOTAL-ASSETS> 42,835
0
0
<COMMON> 0
<OTHER-SE> 9,256
<TOTAL-LIABILITY-AND-EQUITY> 42,835
<TOTAL-REVENUES> 3,840
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (270)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
